Lower prices for homes are beginning to get more buyers attention in Hawaii as the state battles through the financial crisis. Hawaii is known for being a vacation paradise more than any other state, and its tourism business is also suffering through the downturn in the recessionary economy.
The median price for single family homes has dropped nearly $100,000 from the market's height in Oahu, where the housing slowdown started behind most mainland markets last year. The decline is only forecast to worsen through the remainder of 2009 as buyers are more reluctant or are unable to qualify for financing under new stricter qualifying guidelines.
The two-pronged affect has made it more difficult for many in Hawaii to make a living. However, there are fewer homes on the market for sale in Oahu than a year ago, demonstrating that the market may recover sooner than many other areas of the country. Hawaii is primarily a second home market, and its condo market has been hit hard by the crisis with some condos selling for as much as 70% off the market's highs.
Foreclosure sales are increasing in Honolulu, and now make up nearly a quarter of all transactions as owners walk away from mortgages that are too high to afford. Honolulu is projected to experience a slower pace of sales in 2009, despite spikes in sales, but is forecast to finish the year with average housing deflation of 15.1% by Housing Predictor.
 |
| City |
Forecast |
| Honolulu |
− 15.1% |
| Maui |
− 13.9% |
| Hilo |
− 14.2% |
| Kauai |
− 12.2% |
Another of the hardest hit areas in the state is Maui, where home and condo prices have fallen half from the market's peak. Maui was on the way to becoming the most heavily developed island next to Oahu until the financial crisis hit and construction slowed. Housing Predictor forecasts Maui homes and condos will deflate an average of 13.9% in 2009.
In Hilo, the state's second most populated metro area, foreclosures are leveling the playing field for buyers who want to get a deal on a home or condo. Foreclosures are providing a bevy of lower priced properties to choose from as values decline. Average housing values are forecast to deflate 14.2% in Hilo in 2009.
Fewer resort buyers are also hampering sales in Kauai and the Big Island, where prices have also taken a devastating hit.
Kauai is the only island to have adopted strict building limits for high rises, and the limits on growth may act to aid in the market's recovery as a more remote island attracts those who want to get away from the congestion of bigger cities. Homes are selling but at a much slower pace than during the boom. Kauai is forecast to see average housing deflation of 12.2% for the year.
